Norway To Use NADIC as Trade Tool

Nov. 19, 2012 - 01:37PM
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HELSINKI — A state-supported defense industry initiative will drive Norwegian efforts to advance military deals and especially to gain contracts from the F-35 Fighter Acquisition Program (FAP).

The Washington-based Norwegian-American Defense/ Homeland Security Industry Council (NADIC) will offer trade, legal guidance and networking for Norwegian companies accessing the U.S. defense market. Its activities are being supported indirectly by the Norwegian government as part of its Defense Industrial Strategy for partnerships with industry.

The three founding members are Kongsberg and Nammo, Norway’s two biggest defense companies, and the Norwegian Defence and Security Industries Association (FSi). Membership is also open to U.S. defense groups and organizations.

The strategy embodies a general defense export and development drive linked to Norway’s F-35 industrial participation initiative, created in 2009 to maximize spinoff opportunities for local defense firms arising from the FAP.

“Our clear objective is to represent the whole of the Norwegian defense industry base,” said Vidar Skjelstad, NADIC’s president and executive vice president of marketing in the U.S. with Kongsberg Defense Systems. “For companies like Kongsberg and Nammo, we already have a strong presence in the U.S. The same cannot be said of the many smaller-sized Norwegian defense sector companies who would like to do more business here. We will provide legal advice and help them with introductions and inform them on how to best gain face time with U.S. corporations.”

NADIC plans to launch a membership drive at an industrial symposium scheduled for Nov. 27 in Oslo.

More Norwegian defense companies are expected to join NADIC in coming months to better access U.S. buyers, potential business partners and contract opportunities. However, NADIC will not be used to promote individual projects or programs being run by its industry members, said Kongsberg Group’s marketing director, Harald Åre.

“NADIC will operate in the more overall sphere of informing the relevant persons within the U.S. of the advantages that can be gained by allowing Norwegian defense industry companies greater access to the U.S market,” Åre said.

NADIC will work to overcome the traditional barriers foreign defense firms face when selling their wares in a marketplace that prioritizes American suppliers, Åre said.

“There are many companies in Norway that have advanced products that would be a very good fit for the U.S. military. We are talking about a market which can be difficult for companies to navigate on their own. Gathering under the NADIC umbrella will strengthen our position,” Åre said.

NADIC comes at a time of unprecedented activity in the defense sector between the two countries, dominated by the F-35 acquisition project.

Norway is pursuing 100 percent offset for its industry as part of the FAP. The flyaway acquisition cost for the proposed 52 F-35s is $5.71 billion. The cost, including weapons and logistics, is $13.3 billion, while the Norwegian Ministry of Defense has estimated the operating and maintenance life-cycle costs, spanning 25 to 30 years of projected service, at $27 billion to $28 billion.

“The government’s aim is that the value creation associated with the industrial cooperation around the fighter acquisition program will be of the same magnitude as the total value of the procurement,” said Trond Giske, Norway’s trade and industry minister.

Oslo will cooperate closely with NADIC on areas of mutual interest, including improving Norwegian firms’ access to the U.S. defense market. NADIC will also help Norway develop defense and security policies favorable to Norwegian interests with the U.S. Congress and the executive branch.

“The Norwegian government’s defense industrial strategy is intended to provide our defense companies with strong state support. It is in all our interests to work to obtain a fair and competitive environment for Norwegian defense products in the U.S,” Giske said.

The FAP is expected to deliver contracts worth more than $2 billion to leading Norwegian companies, such as Kongsberg (missiles and weapon systems), Nammo (munitions), Kitron (weapons and radar surveillance systems), Simrad Optronics (defense electronics), Natech (electro-optics) and Simpro Defense (sensors and missile technologies), by 2018.

Contracts have already started to flow from the FAP, with Kongsberg securing four orders valued at $50 million from F-35 prime contractro Lockheed Martin and Northrop Grumman in the first nine months of 2012 to deliver rudders and vertical leading edges, center fuselage parts and air-to-air weapon pylons for the F-35.

Inter-government talks in June resulted in Norway obtaining U.S. support to integrate Kongsberg’s Joint Strike Missile (JSM) into the F-35, although the U.S. stopped short of committing to buy the JSM for American aircraft.

U.S. support is regarded by Norway as a vital precondition to sell the JSM to F-35 partner nations.